Correlation Between Microsoft and Ibase Gaming
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ibase Gaming at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Ibase Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ibase Gaming, you can compare the effects of market volatilities on Microsoft and Ibase Gaming and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Ibase Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ibase Gaming.
Diversification Opportunities for Microsoft and Ibase Gaming
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Ibase is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ibase Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibase Gaming and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Ibase Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibase Gaming has no effect on the direction of Microsoft i.e., Microsoft and Ibase Gaming go up and down completely randomly.
Pair Corralation between Microsoft and Ibase Gaming
Given the investment horizon of 90 days Microsoft is expected to generate 0.73 times more return on investment than Ibase Gaming. However, Microsoft is 1.36 times less risky than Ibase Gaming. It trades about -0.04 of its potential returns per unit of risk. Ibase Gaming is currently generating about -0.17 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Ibase Gaming
Performance |
| Timeline |
| Microsoft |
| Ibase Gaming |
Microsoft and Ibase Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ibase Gaming
The main advantage of trading using opposite Microsoft and Ibase Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ibase Gaming can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ibase Gaming will offset losses from the drop in Ibase Gaming's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Ibase Gaming vs. Silicon Power Computer | Ibase Gaming vs. Universal Vision Biotechnology | Ibase Gaming vs. TWOWAY Communications | Ibase Gaming vs. Loop Telecommunication International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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